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How to rebuild credit amid financial challenges

As many Tennessee readers probably already know, outstanding credit card debt can reek havoc on a person's financial situation. While this may not be true for everyone, it can be particularly challenge for those trying to operate a small business. While such financial challenges can seem insurmountable at times, there are ways for small business owners and individuals to rebuild their credit scores and to reestablish themselves financially after running into serious credit card debt.

One option for individuals who are facing significant credit card debt is Chapter 7 bankruptcy. Chapter 7 bankruptcy is a form of liquidation bankruptcy in which the filer's estate is liquidated to repay creditors. While this may sound scary, there are a number of state and federal bankruptcy exemptions that protect various assets during the bankruptcy process. In fact, many individuals who file for Chapter 7 never lose anything, other than their debt.

One of the main reasons that most people are hesitant to file for bankruptcy is the fear that filing for bankruptcy will destroy their credit score. While filing for bankruptcy does affect a person's credit score for some time following the proceedings, it is not forever and there are ways to immediately begin rebuilding a credit score. One of the primary ways to rebuild a credit score is with a secured credit card.

A secured credit card is a card that requires a deposit. The user makes a security deposit with the card issuer, which the issuer can use to pay the debt if the user falls behind on their bills. Unlike a debit card, which draws directly from a persons checking account and does not show up on a credit score, a secured credit card is recognized as credit when a purchase is made. This allows the credit card user to rebuild their credit score overtime.

Source: Fox Business, "Rebuilding Credit to run Your new Business," Elaine Pofeldt, May 7, 2013

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
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